COMMISSIONER OF INCOME TAX Vs. RAMESH SURI

JUDGEMENT

(1.) THE following reference has been received under the erstwhile Section 256(2) of the Income Tax Act. It is agreed that the question of law which this Court has to answer is "Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of US Dollars 16000 equivalent to Rs.1,84,860/ - received from Arjun C. Waney was in the nature of gift in the hands of Shri Ramesh Suri and hence not taxable - The undisputed facts are that one Mr. Arjun C Waney settled in United States, gifted an aggregate of $3 lakhs vide a letter dated 10.1.1984 to one Sh. Ashwani Suri. A letter and the other correspondence - which was placed on the record of the Income Tax Authority, directed the beneficiary Mr. Ashwani Suri to distribute the sum received in different proportions. The relevant extract of the letter reads as follows :

(2.) MR . Ashwani Suri, the original donee complied with the directions of the donor contained in the letter and transmitted the relevant amounts to each of the beneficiaries named in the said letter. These transactions were made out by each of the beneficiaries. The revenue sought to bring to tax these amounts, on the plea that the sources of income were undisclosed, and were liable to be added back under Section 68, since they were not genuine gifts. The assessees, including the present assessee, resisted these proceedings and relied upon various letters which are set out in the order of the CIT. The said letters are as follows :

(3.) THE Income Tax Appellate Tribunal (hereinafter referred to as "the ITAT") rejected the revenue's appeal. In doing so, it followed its previous ruling in the case of the original donee Mr. Ashwani Suri. This led to a payment by the revenue, for a reference which was rejected. Revenue therefore approached this Court under Section 256(2). That was disposed of by a judgment reported as CIT v. G. Sagar Sun & Sons & Ors. : (1998) 234 ITR 58 (Del). The revenue's claim was upheld and the ITAT was directed to frame appropriate questions, which it did. It is in these circumstances that the question adverted to above has been referred.